Online Share Market News

Judge tosses shareholder lawsuit against Angie’s List

A judge said he will throw out a potential shareholder class-action lawsuit against Angie’s List that aimed to show a stock price drop in 2013 was caused by its executives’ misconduct. Federal judge William Lawrence’s ruling, made Thursday, said the allegations in the lawsuit “are simply too vague and attenuated” to stand up in court. But he did give the plaintiffs 28 days to refile an amended complaint.

The lawsuit in federal court in Indianapolis is a consolidation of several lawsuits filed by nine law firms from Indianapolis, New York and the Philadelphia area that alleged securities violations against Angie’s List. The lead plaintiff in the lawsuit is a United Food & Commercial Workers union pension fund. The Indianapolis company is an Internet-based provider of consumer reviews for home repair services, doctors and other providers. It went public in late 2011. Lawyers at four of the key plaintiffs’ law firms in the case did not respond to a request for comment. Angie’s List spokeswoman Cheryl Reed also declined to comment.

Shareholder class-action lawsuits are common in the corporate world. They have led in some cases to multimillion-dollar judgments or settlements on behalf of shareholders. But Lawrence said the consolidated Angie’s List lawsuit fails to make a strong enough case to proceed in court. The plaintiffs built much of their case on the argument that Angie’s List diluted the quality of its membership in 2013 by slashing its membership price from $40 to $10 in some markets, including Indianapolis. That disrupted the company’s membership-based business model, plaintiffs said, and led to a sharp stock price decline. Angie’s List stock price fell 50% between July and December 2013, from $28 a share to $14.

“The problem,” the judge said in his order, “is that these allegations … are nothing more than unfounded assumptions and speculation. … Simply put, the complaint is devoid of any facts regarding the outcome of the reduction in membership fee.” In asking the judge to dismiss the case, Angie’s attorneys said the plaintiffs failed to come up with any proof to back their argument. “No document supports this assertion; no witness purports to corroborate it. Plaintiffs are simply wrong.”